Should Young Consumers Struggling With Student Loan Debt File Bankruptcy in New York City?
For many of us in New York getting ahead means you probably need an education, and are going to have to pay for a degree. Sadly, increasing your chance for a good job can also be devastating to your personal finances. For young consumers in New York just out of college, the monthly student loan payments are often the straw that breaks the camel’s back financially. Overall across the United States the total amount of student loan debt now exceeds all other types of debts except mortgages. An increasing number of recent graduates are having difficulty paying their student loans or may already be in default.
If you are struggling with overwhelming debt then filing for bankruptcy is always an option to explore, but unfortunately bankruptcy cannot directly rid you of your student loan debt except in very extreme and rare situations. Unlike other types of debt including medical bills, credit cards and auto loans, student loans can’t be eliminated, or “discharged” in your bankruptcy. Although there has been much recent talk of the laws, currently students are still legally obligated to pay their student loans if they file for bankruptcy.
However, while bankruptcy cannot currently eliminate your student loans directly it can make the load easier to bear for many young consumers. New graduates that are looking for work, underemployed or just starting a job in New York City are very likely to owe considerable amounts towards their credit cards and may have significant other unsecured debts including medical bills. Filing for bankruptcy will eliminate all of these problematic unsecured debts leaving more money each month to put towards student loan payments.
Similarly, Chapter 13 Bankruptcy can help pause your student loan payments. While in a 3 or 5 year Chapter 13 case you are not responsible to make payments to your student loan lender. There is also a “co-debtor automatic stay” which protects others who are liable on your student loan accounts from lawsuits or other adverse action. In a Chapter 13 it is also possible to completely pay off student loans without interest.
Starting your professional life deeply in debt can be a major challenge to a young person’s success. If you truly can’t make your ends meet now, then filing for bankruptcy might be better than a foreseeable future of unmanageable debt. Every situation is different; you will need to consult a qualified bankruptcy attorney.
Student loans are not just hurting young graduates. There are an increasing number of parents and grandparents suffering as well. Student loan debt for parents and grandparents financing their children or grandchildren’s education has increased fivefold since the economy’s decline in 2008. A greater number of all people are looking to bankruptcy relief as a way to stop the financial pain from student loans.
Get the facts for yourself from a reputable bankruptcy attorney. If you live in New York, and want to learn how bankruptcy can alleviate your student loan trouble contact the Law Offices of William Waldner. We will advise you about the best way to both eliminate your toxic debts to help you pay off your student loans. Arrange a free consultation online or by calling 212-244-2882. We are a boutique law firm that offers affordable debt relief assistance for all New Yorkers.
This article is intended for educational purposes only. By reading this article no attorney-client relationship has been created.